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Daily Reports @ WJR

WJR June 2001 reports

June 29, 2001

We had a nice day from the get-go yesterday as stocks moved up across the board on pretty good volume. The Appeals Court ruling overturning the break-up remedy in the Microsoft case really didn't impact stocks a great deal, but it sure didn't hurt.

Today will be an interesting day for people who invest in stocks of smaller companies. The Russell indexes will be readjusted today. The Russell 1000 will add 15 to 20 , companies to its roster, the Russell 2000 may add over 500 companies. Mutual funds that invest according to those indexes will be doing a lot of buying and selling to rebalance their funds. That should add a good bit of volume and some interesting price changes in small, and midcapitalization stocks.

Three warnings this morning, but nothing dramatic. Agere Systems, Dow Chemical and PMC Sierra all warning. PMC, however, is actually trading up this morning in pre-market trading.

The futures are ever so slightly positive this morning. Adjusted for fair value, S&P and Dow futures are virtually flat. Nasdaq futures are up about 4 points.

June 28, 2001

The market was looking for one of two things from the Fed yesterday. Either a ½ percent interest rate cut, or, if only a quarter point cut, some word from the Fed that economic conditions are improving. Well, the market got nothing. Everything in the Fed's statement indicated that things aren't getting any better in the economy - the statement was virtually identical to the statement from the last meeting, yet we only got a quarter percent cut.

So apparently, Mr. Greenspan still is still trying to kill the beast, the beast's not dead, but maybe the hunter,, , , is getting low on bullets and hopes that the beast will just kinda get scared and go away.

We're into the last two trading days of the quarter, so a lot of money managers will be "dressin, g up" their portfolios for display in their quarterly reports. ConAgra beat estimates by 3 cents. Fedearl Express beat estimates by 12 cents this morning. Nike beat estimates by a penny, but warned about the next couple of quarters.

Not much of a fair value adjustment this morning. In the futures, what you see is what you get, and the gettings has been good since about 6:30 this morning. S&P futures up 8, Dow futures up 62 and the Nasdaq futures are up about 33 points.

June 27, 2001

The fireworks start in the stock market at 2:15 this afternoon. That's when Mr. Greenspan and Company will announce whether interest rates go down ¼ percent or ½ percent. In the big picture, >Interest rates have been cut six times in succession fo, ur times in the past thirty years. According to calculations from Birinyi Associates, stocks in almost all major indexes and in a majority of industries traded LOWER three months after the 6th rate cut. HOWEVER, a year after the sixth cut, stocks of vi, rtually every industry group went higher, the S&P 500 averaged a 19% gain, the Dow Jones 18.5% and the Nasdaq over 24%.

Is it different this time? Well, it's different EVERY time. But, there's no question that lowering interest rates will at some point in the future help this economy and probably kick-start the stock market.

The futures are pretty uninteresting this morning. Adjusted for fair value, S&P, Dow and the Nasdaq futures are all within a few points of fair value.

June 26, 2001

Paul, can I get MacMurray's job for a while? I feel like a Detroit weatherman in January - there's just not a lot of good news to report, and the cold weather just keeps on coming.

A warning this morning from Merrill Lynch. They're going to miss their number by , a bunch. Merrill down about 9% in the pre-market. Last night, Applied Micro warned - and that's pulling down most of the chip stocks this morning. Other warnings from Robert Half and Cheap Tickets overnight. International Paper is cutting 3,000 jobs..... oh, let's talk about something else.

The May Durable Goods number comes out in 15 minutes, the M, ay Consumer Confidence Index will be out at 10 o'clock as well as New Home Sales. The Federal Reserve Open Market Committee meeting today and tomorrow - they'll be watching those numbers. Consensus is that the Fed will cut ¼ of a percent. Although they certainly don't want to overdo it, I think there's a significant chance that we'll get another half-point cut, do to the weakness in manufacturing and all the job cuts.

The futures are telling us that if you have to watch TV today, the Disney Channel may a lot more fun than CNBC. Adjusted for fair value, S&P futures are down 15, Dow futures are down 79 and the Nasdaq futures are 43 points below fair value. In other words, overcast with a 100% chance of thunderstorms.

June 25, 2001

, It won't shake the markets today, but IBM says that using silicon germanium technology, it has developed a transistor that will be able to drive microchip to a speed of over 200 gigahertz. That's a lot faster than anything out there now. More communications stuff will getting smaller and faster in the years to come.

Twice every year Alan Greenspan's wacky bunch gets together , for a two-day meeting. The last two-day party of the year starts tomorrow. Hopefully, interest rate cut excitement can overshadow whatever earnings warnings are on the way this week. We haven't had anybody fall out of bed this morning, but make no mistake - there will be more warnings before the quarter ends on Friday.

Washington Mutual buying Dime Bancorp this morning. That should give a lift to regional bank stocks.

Asia was weak overnight, but Europe is generally positive. Futures in pretty good shape so far. Adjusted for fair value, S&P futures are up 5, Dow futures are up 31 and the Nasdaq futures are 24 points above fair value.<, br>

June 22, 2001

The Nasdaq has a three day winning steak going, but we'll need a little help to make it four. Last night - what else - earnings missed and earnings warnings. The big one was Micron Technology. Analysts were expecting a loss of 15 cents per share from that memory chip maker. Micron reported a 53 cent loss. Big miss. But, about half of that number was an inventory writedown. While inventory writedowns are not a good thing, a wr, itedown is an accounting convention. Those memory chips are still hanging around and will probably not be thrown in the trash. Bottom line, the number looks horrible, but the stock may not sell off as much as you might think. In fact, Micron is unchanged in premarket trading this morning.

Not so for software maker Symantec. They warned yesterday and the stock is off about 25%. There's a rumor going around that IBM might warn about earnings soon - so far no official word on that. Merck lowered their estimates for the year this morning by a couple cents.

Futures area weak this morning. Adjusted for fair value, S&P futures are off 4, Dow futures down 47 and the Nasdaq futures are 5 points below fair value.

June 21, 2001

We had a pretty entertaining tug of war in the stock market yesterday. We switched back and forth from big losses, to big gains and back and forth again as the market couldn't decide whether to pay more attention to earnings warnings or Alan Greeenspan.

Disappointing earnings from software maker Verity last night as well as earnings warnings from Exodus Communications, and Sanmina. LSI Logic is cutting its workforce by another 3%. It's hard to find any good news is technology right now.

Even a hot non-technology stock, H&R Block warned that the rest of the year might not be so rosy. Block stock has been on a roll this year, thanks to that mess of a tax bill Congress passed last month.

Last week's jobless numbers come out in ten minutes. The European Central Bank left interest rates unchanged this morning. Of course the Federal Reserve Open Market Committee meets next week to decide on the >No apparent direction for stocks this morning, U.S. futures all within a few points of fair value.

June 20, 2001

Warning, warning, warning, Will Robinson. Danger, danger, danger. Overnight, a bunch more warnings, especially with technology stocks. Tellabs, a telecom equipment maker admitted that life in the telecom business has changed. They now hope to break even, versus a 39 cent per share profit last year, and analyst estimates of 29 cents. Tellabs is down 18% this morning.

Other bad news overnight included a warning from Asyst Technologies, a warni, ng from German chip maker Infineon, a production cutback from Japan's biggest chipmaker Toshiba. All the chip makers are likely to have a lousy start to the day. On top of all that, it looks like the GE/Honeywell merger is dead - killed off by , European regulators. Let's just hope that we won't see some knee-jerk regulatory reaction out of Washington in response.

Alan Greenspan is giving a speech at 10 o'clock this morning, and maybe that will take the market's mind off these warnings, but then again, maybe not. U.S. futures are weak this morning, as you would expect. Adjusted S&P futures are down 3, Dow futures are down 20 and Nasdaq futures are 23 points below fair value.

June 19, 2001

After another bad tech day yesterday -- the Nasdaq fell below the 2000 level -- we really needed some good news from software maker Oracle - and we got it. Not that the news about the quarter gone by was ALL that good. Yes, earnings were a penny better than expected, but rev, enue was down almost 3% from last year. The good news was that their CFO says he "feels" that business has bottomed, is on the way back, and may be back to normal by the end of the year. Now that's not "great visability", but it's the closest thing to a positive statement we've heard out of anyone lately, and this morning's market will be strong as a result.

Plenty of earnings reports on the way today. Ja, bil Circuit, Best Buy, Goldman Sachs and Lehman Brothers all report, and you have to believe that if they had incredibily bad news, it would be on the table already.

Looking at the futures this morning, there's a big spread between the futures and cash, and even though the futures look strong, they're even stronger adjusted for fair value. Adjusted S&P futures are up 11, Dow futures are up 63 and Nasdaq futures are 54 points above fair value.

June 18, 2001

Paul, it's a new week, and we're going to approach it with a whole new attitude. Last week, and last Friday in particular - not a lot of fun. The Dow lost over 3% last week, the Nasdaq Composite lost over 8% and the Nasdaq 100 over 10%. But, that was then and this - well it's Monday.

We're just about week away from another inte, rest rate cut, and in the meantime, we'll just have to hope that the earnings news gets better and the earnings warnings slow down a bit. There have been 743 pre-annoucements this quarter, and 65% have been negative.

Today we get earnings from a couple big tech companies. Solectron, the electronics manuf, acturing company is expected to report earnings of 13 cents per share. After the market closes this afternoon, Oracle, the big software maker is expected to announce that it earned 14 cents for the quarter.

No big economic news is due today - or for that matter - this week, so earnings reports and interest rate cut speculation will be the center of attention.

Adjusted for fair value, the futures are mildly positive. S&P futures are up 2, Dow futures are up 13 and Nasdaq futures are 8 points above fair value.

June 15, 2001

Look out below. There's not much good news out there this morning. Warning after warning about current quarter earnings have been rolling in. Last night, JDS Uniphase warned about a 7 cent loss versus an expected 5 cent profit. This morning, Nortel warned about a current loss of 48 cents a share. They were only expected to lose 6 cents. Adobe warned about the res, t of the year, International Rectifier warned - and there's a rumor this morning that Microsoft might warn.

If that weren't enough, the European Competition Committee and General Electric may be at an impasse on the GE/Honeywell merger. That has ramifications well beyond the deal - in that it's a case of Europe denying the will of two U.S. companies to merge.

It's going to be a wild day for stocks. On top of all the warnings and the international political problems, we get the Consumer Price Index in 15 minutes, Indust, rial Production numbers in an hour, the U of M Consumer Sentiment Index at 10 o'clock - AND it's a triple witching Friday - so stocks should be in for a wild ride.

Adjusted for fair value, the futures are just plain ugly. S&P futures are off 9, Dow futures are down 55 and Nasdaq futures are 39 points below fair value.

June 14, 2001

Earnings warnings continue to cast a pall over the stock markets. Through yesterday, 64% of all pre-announcements have been negative this quarter. That's less than the 69% of last quarter. But there's still no indication that economic conditions are turning up just yet.

Heinz matched estimates for the quarter, but warned for the res, t of the year. Pepsi and Texas Instuments reiterated their earnings guidance. At 8:30, we get the May Producer Price Index and the Jobless Claims number for last week.

General Electric is having problems getting the Honeywell acquisition past European regulators. This isn't a huge deal for the overall market UNLESS the U.S. government gets involved on behalf of GE. That could spark fears , of a trade war - and trade wars don't do anybody much good.

Asia was mixed last night. European markets are down between 1 and 2% this morning. Adjusted for fair value, the futures are weak in advance of all those numbers 15 minutes from now. S&P futures are off 2, Dow futures are down 34 and Nasdaq futures are 21 points below fair value.

June 13, 2001

Yesterday was a very interesting day for stocks. The earnings warning from Nokia came exactly 24 hours ago really knocked stocks around in early trading. In the first hour yesterday, 26 of the 30 Dow Jones stocks were down. But the turnaround in the afternoon was so broad based, only one of the Dow stocks lost ground after 10:30 yesterday morning.

Today's big news, absent any more big surprise warnings, is the May retail sales report. That comes out in about 15 minutes. Expect a 3 tenths of a percent , increase, 1 tenth of a percent excluding auto sales. Although strong retail numbers historically pull stock prices down on the day of release, this time around a stronger than expected number will probably give stocks a boost. That's , because the market's big short term worry is not inflation, but recession.

Asia was flat last night. European markets are mainly up this morning. Adjusted for fair value, the futures are mixed. S&P futures are off a point, Dow futures are up 7 and Nasdaq futures are 2 points below fair value.

June 12, 2001

There aren't as many people signing up for that Direct-TV service as had been expected. That was the news from Hughes Electronics overnight. Hughes still expects its second quarter cash income to be near the top end of what was expected, but that subscriber slowdown news maybe a problem for GMH today. They're down about 6% in the pre-market. Affymetrix with a warning yesterday. They're down about 22% this morning.

The warnings just kept on coming yesterday. We're closing in on 500 negative earnings pre-announcements. That's far more than last year, and it's not nearly over. The question is - how much has the market "priced in" the bad news to come.

Unfortunately, there's not m, uch else to focus on today - there's a Bear Stearns technology conference going on - some computer executives will be speaking there. A Federal Reserve Governor will be speaking in New York later today. But overall, , any market moving news will be coming at us out of the blue.

Japan was down 3% last night. Europe is also weak. Adjusted for fair value, S&P futures are down 5, Nasdaq futures are down 41, but the Dow futures are down about 45 points.

June 11, 2001

Friday turned out to be, well just a weird day for stocks. Trading volume was very light, trading was actually stopped for most of the morning session on the New York stock exchange because of a software problem. Hopefully we're a bit more back to normal this morning.

There's nothing big on the calendar for today - but there's plenty coming in the week ahead. There are five big initial public offerings coming to market this week, the biggest of which is Philip Morris' partial spinoff of Kraft Foods. The market for initial public offers has been pretty anemic for the past year, and it will be interesting to see how the deals this week are received.

One major brokerage firm changed their reco, mmendation on Ford s, tock , this morning. Ford is up a buck or so in the pre-market. And, of course, we're heading into the middle of "earnings warnings" season - so things could change in a hurry for the stock of any company that puts itself in the spotlight.

No big movement overseas overnight. The U.S. futures are pointing to a slightly lower opening this morning. Adjusted for fair value, S&P futures are down a point, Nasdaq futures are down a point and the Dow futures are down about 31 points.

June 8, 2001

In the most anticipated meeting in the chip world since Frito met Lay, Intel met with analysts last night. They said that earnings are on track with expectations and that they see good times ahead for the personal computer industry. Assuming that they know what they're talking about - always a big assumption when people start predicting the future - this could be a bit of the "visability" we've been looking for since December.

However, one big warning this morning - Juniper Networks says quarterly revenue will miss expectations by some 50%. Earning will be way off expectations. They'll cut up to 9% of their s, taff. Juniper down about 15% in pre-market tr, ading.

If you like internet access without paying big monthly fees, your few remaining choices became one fewer yesterday. NetZero and Juno are merging, as they struggle to survive the America Online/Microsoft Network onslaught.

No big economic reports or earnings reports scheduled today. But at the open, it looks like the Juniper warning will kill the Intel rally this morning. Adjusted for fair value, S&P futures are down 6, Dow futures are down 25, Nasdaq futures 7 points below fair value.

June 7, 2001

The big news overnight came from California - that land of clear logic and rational thought. A Los Angeles jury awarded a smoker more than 3 billion dollars from Philip Morris. They concluded that the smoker never knew that cigarettes were bad for him, nobody ever told him otherwise, now he has cancer and that entitles him to 3 billion dollars. Presumably he will take that money and build some electrical power plants to bail out everyone else in the state who never knew that you have to have power plants to generate electricity. Nonetheless, Philip Morris is down 3 dollars in pre-market trading.

A warning from Broadcom last nig, ht - their qua, rter is not shaping up as well as analysts expected. The big story of today is likely to be Intel. They will talk to analysts after the general market closes. It's their first regularly scheduled mid quarter update. Many are expecting that their news will be less than wonderful - of course that expectation may already be reflected in the stock's price.

Futures are slightly negative this morning. Adjusted for fair value, S&P futures are up ½ point, Dow futures are down 10, Nasdaq off about 6 points.

June 6, 2001

The earnings warnings we feared this week - well, they just haven't happened. That's starting to get people believing that yes, the worst may be behind us. Yesterday, even Lucent reaffirmed their earnings guidance - and heck, when Lucent doesn't warn about decreasing expectations - well that's news. Lucent also set to offer early retirement offers to as many as 15,000 U.S. managers.

One interesting twist yesterday was the President Bush's call for an investigation into alleged dumping by foreign s, teel companies. There are a bunch of big U.S. steel companies operating with bankruptcy protection right now, and any protectionist import measures may help , the steel industry short term. The other side of the coin, industries that use steel - like maybe the auto industry --- may see their costs rise. Steel stocks shot up yesterday.

Don't look now, but since the lows this spring, the Dow is up 19%, and the Nasdaq is up 36%.

Futures are pretty flat this morning. Adjusted for fair value, S&P futures are down a point, Dow futures are down 13, and the Nasdaq futures are up about 9 points.

June 5, 2001

The now world-famous Tiger Woods effect worked again yesterday. So far this year, Tiger has won four times - the Dow and the Nasdaq have risen four times - and most of those times the advances were pretty good ones. That goes hand in hand with the Paul W. Smith effect - every time you've broken 90 the Dow has gone to 15,000.

No big golf tournaments to watch today, but the only people who make more money than Tiger Woods -the OPEC oil ministers - are getting together today to d, ecide whether to pump additional oil this month. That oil would make up for oil Iraq says it won't be sending to market because of their latest , tiff with the United Nations. Word is that OPEC will fill the gap temporarily, but will schedule an emergency meeting next month to formally reconsider the situation at that time.

First quarter productivity figures come out in fifteen minutes. Productivity has been slipping of late, and that's not a particularly good signal.

Futures are mixed but on the whole positive this morning, in advance of that productivity number. Adjusted for fair value, S&P futures are up 2 1/2, Dow futures are down about 7, but the Nasdaq futures are up 22 points.

June 4, 2001

This is a good time for everybody to look in the mirror. Decide whether your're a trader or an investor, and act accordingly. The economic backdrop is starting to look good for long term stock investing. The employment numbers that were released last Friday actually show a DECREASE in the unemployment rate, which was a surprise, and may portent that the econm, oic slowdown doesn't have long to to go.

Alan Greenspan spoke over the weekend, and empha>On the other hand, stocks could be on a short term roller coaster as earnings warnings season continues. Oracle was expected to warn on Friday, and they didn't - but Intel has a conference call scheduled for Thursday. It's getting to the point where they not only schedule the quarterly earnings - now even the warnings are getting scheduled ahead of time. So look for a volatile week ahead.

So with so much near term danger - what do the futures show? We could actually get a rally at 9:30. Adjusted for fair value, S&P futures are up 5.5, Dow futures up 45, and Nasdaq futures up 22 points.

June 1, 2001

The parade of earnings warnings continued last night. Another computer chipmaker, Altera, said its second quarter revenue will be down 25%, rather than the 20% that analysts expected.

But forget about warnings, forget about the weather, forget about every other statistic you care about - at 8:30 this morning the Labor Department reports employme, nt information for the month of May, as well as the average hourly wage. These are almost always market moving numbers and a lot of speculation this morning that some surprises are in store. Th, e consensus outlook for jobs is a decline of 17,000, but there are some who say the economy may have lost somewhere between 50,000 and 100,000 jobs in May. That kind of number would indicate that the economic slump may start to impact consumer spending. Although that would give the Fed the green light for more interest rate cuts, at some point, business activity has to accelerate to generate better profits.

The futures are weak. Adjusted for fair value, S&P futures are down 8, Dow futures are off about 41 points, Nasdaq futures 16 below fair value, but all that can change dramatically in 15 minutes.

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